A tax loophole that allows second homes owners to avoid paying council tax on their properties will be investigated after a north Norfolk MP highlighted the issue.

The government have announced a consultation on the criteria under which holiday homes are charged business rates rather than council tax, and could close the loophole which is costing a north Norfolk council £1.8m this year alone.

North Norfolk Liberal Democrat MP, Norman Lamb, petitioned the Chancellor over the issue, after 1,769 people put their names to it.

The Budget statement on holiday homes cited a concern that some owners of properties that are not genuine businesses may seek to reduce their tax liability by falsely declaring that the property is available to let.

It stated: “To ensure that second properties are subject to the appropriate tax, the government will consult on the criteria under which self-catering and holiday lets are charged business rates rather than council tax.”

North Norfolk MP Norman Lamb has petitioned the government to close a tax loophole on second homes. Picture: DENISE BRADLEY

In England, any property that is “available to let” for 140 days or more per year can be registered as a holiday business.

Holiday homes with a rateable value of less than £12,000 are eligible to receive 100% small business rate relief, meaning that the owners do not have to pay tax.

Government figures released earlier this year revealed 810 properties bought in north Norfolk in 2017-18 were second homes, a 25pc increase on the previous year’s 650.

Wells Quay bathed in sunshine. Many properties in the town are second homes. Picture: Ian Burt

And North Norfolk District Council (NNDC) revealed 1,302 second-home holiday lets are claiming 100% small business rate relief in 2018-19 – at a cost of £1,873,998.

Mr Lamb said: “It’s encouraging that the Government has listened to concerns raised about this unfair loophole.

“Hard-pressed residents in North Norfolk are paying higher council tax bills to fund vital local services, while some owners of second homes that are registered as holiday lets are getting away with paying no tax at all on that property.

“This loophole costs councils a staggering sum of money which could be spent on care for the elderly, children’s services or housing for local people.

But NNDC member for planning policy, Sue Arnold, defended second home ownership.

She said: “North Norfolk is a tourist area and we certainly don’t want them to feel unwelcome.”